Fiat Chrysler Automobiles is under investigation for fraud by the United States Justice Department. Federal prosecutors are looking into whether the automaker violated U.S. securities laws. A previously filed civil lawsuit, in which a Chicago- area dealership alleges FCA inflated U.S. car sales by paying dealers to report selling more vehicles than they actually had, indicates that investigators are looking into FCA's sales reporting practices.
In January, two Fiat Chrysler dealerships filed a civil racketeering suit against FCA. The suit claimed that the automaker "knowingly endorses and encourages the false reporting of motor vehicle sales by directly rewarding its local managers ... with monetary and quarterly bonuses which are directly related to reported vehicle sales numbers."
Specifically, it alleged that dealership principal Edward Napleton was asked to falsely report 40 vehicles as sold in exchange for $20,000 that would be given to him "under the disguise as cooperative advertising support." Per the lawsuit, Napleton rejected the proposal.
This suit also alleged that the timing allowed these fake sales to be reported, only to be "backed out" on at the start of the following month, before the factory warranty on the vehicles could be processed.
FCA has said in a company statement that they are "cooperating with a (Securities and Exchange Commission) SEC investigation into the reporting of vehicle sales to end customers in the U.S."
At the time of the January lawsuit, FCA had recorded 69 straight months of year-over-year sales increases in the United States. Supposedly sales were inflated to keep this streak, which now stands at 75 months, in tact. However, Fiat Chrysler stopped including the sales streak in it's press releases back in March, instead including forward-looking statements and sections on determining monthly sales.
This sting of year-over-year sales increases is the longest of it's kind in the U.S. and has been a source of pride for those in the company following it's exit from bankruptcy in 2009.
NAFA Fleet Management Association
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